New EU Legislation Could Put Damper on Korean Electronics Exports to Europe

EU’s new environment legislation on electrical and electronic equipment, which is scheduled to take into force on August 13, is expected to cost the domestic electronics industry dearly.

It is expected to cost Samsung Electronics and LG Electronics an additional 90 billion won a year respectively.

The domestic electronics industry and the Korea Institute of Industrial Technology under the Ministry of Industry, Commerce and Energy announced on July 22 that the EU’s Waste Electrical and Electronic Equipment (WEEE) directives would be implemented beginning on August 13.

Under the new directives, manufacturers in 25 EU member countries are responsible for collecting and disposing waste electronic equipment they originally make. Otherwise, they have to relegate the task to other recycling companies and pay for it.

The cost incurred in the process is expected to amount to five percent of sales revenues for some products, undermining the profitability of the local electronics market.

The Korea Institute of Industrial Technology, commissioned by Dong-A Ilbo, estimated that Samsung Electronics and LG Electronics are expected to shoulder additional costs amounting to 90 billion won a year respectively in European region.

It is the first time that the estimated costs associated with implementation of the WEEE have been revealed in detail.

In the home appliances division selling refrigerators, washing machines and others, Samsung Electronics lost money and LG Electronics’ operating profits stood at a meager 7.2 percent of sales revenue last year.

All in all, they are expected to spend all of their operating profits or more in collecting and recycling waste products, after struggling to sell products for a year.

Suk-Min Hong smhong@donga.com